Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies

FCN Working Paper No. 1/2008

42 Pages Posted: 4 Jun 2010 Last revised: 10 Nov 2012

See all articles by Reinhard Madlener

Reinhard Madlener

RWTH Aachen University

Ilja Neustadt

RANEPA, School of Public Policy

Peter Zweifel

University of Zurich - Department of Economics

Date Written: July 1, 2008

Abstract

The search for economically efficient policy instruments designed to promote the diffusion of renewable energy technologies in liberalized markets has led to the introduction of quota-based tradable 'green' certificate (TGC) schemes for renewable electricity. However, there is a debate about the pros and cons of TGC, a quantity control policy, compared to guaranteed feed-in tariffs, a price control policy. In this paper we contrast these two alternatives in terms of social welfare, taking into account that electricity markets are not perfectly competitive, and show that the price control policy dominates the quantity control policy in terms of social welfare.

Keywords: Green Certificates, Renewable Portfolio Standard, Feed-in Tariff

JEL Classification: Q42, Q48

Suggested Citation

Madlener, Reinhard and Neustadt, Ilja and Zweifel, Peter, Promoting Renewable Electricity Generation in Imperfect Markets: Price vs. Quantity Policies (July 1, 2008). FCN Working Paper No. 1/2008 . Available at SSRN: https://ssrn.com/abstract=1620409 or http://dx.doi.org/10.2139/ssrn.1620409

Reinhard Madlener (Contact Author)

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustra├če 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

Ilja Neustadt

RANEPA, School of Public Policy ( email )

Moscow
Russia
+7 968 067 63 79 (Phone)

Peter Zweifel

University of Zurich - Department of Economics ( email )

Zuerich
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
141
Abstract Views
780
rank
220,679
PlumX Metrics